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Abstract

The establishment of the World Trade Organization ("WTO"), which replaced the five decades of the General Agreement on Tariffs and Trade ("GATT") regime,' has significantly reinforced multilateral control over international trade on a global scale. As of October 2005, membership in the WTO has reached 148 nations, including the majority of former Soviet bloc and other communist countries,2 making the WTO the "United Nations of International Trade.",3 WTO disciplines have significant impact on world trade today; they have been enforced by the monitoring activities of various WTO bodies and by strengthened dispute resolution mechanisms. In addition, a significant number of bilateral/regional trade agreements co- exist alongside the WTO. There are over 130 of these agreements in force. Around 90% of WTO members have signed at least one or more regional trade agreements ("RTAs"). Thus, the bilateralism represented by these RTAs is as much a factor as the multilateralism of the WTO in shaping international trade relations today. RTAs provide exclusive preferential treatment to trade with member states.These exclusionary preferences by RTAs create a discriminatory environment in international trade. This is not consistent with the core objective of the multilateral trading system, namely the Most-Favored Nation ("MFN") principle. Current GATT/WTO provisions allow for the establishment of a customs union or free trade area as an exception to the MFN requirement. The rationale for this exception is that the preferential trade arrangement of a customs union or free trade area could eventually develop into a multinational framework, thereby giving the benefit of lower trade barriers to more countries as the number of participating countries increases.The growth of membership has also been seen in many customs or free trade areas. For example, the European Community has grown well beyond its original membership, which was comprised a limited number of Western European countries, to include most of Europe today. The proliferation of these trade "clubs," which provide trade preferences limited to their members, may undermine the WTO's objective of promoting non- discriminatory trade for all nations. Problems are compounded because some of the recent bilateral trade agreements purport to impose regulatory elements beyond the reduction of trade barriers, such as enforcement of intellectual property rights, the requirement of environmental and labor standards, and the authorization of uninhibited capital transfers. The inclusion and promotion of these regulatory elements in free trade agreements ("FTAs") has significant implications on the current multilateral trading system. Section Ilof this article discusses the proliferation of RTAs, most of which are FTAs, as well as their impact on and consistency with the multilateral trading system. The Mainland China and Hong Kong Closer Economic Partnership Agreement is introduced as an example of a recent bilateral trade treaty between developed and developing economies; its consistency with relevant WTO requirements is examined.This article also provides a discussion of bilateralism in the regulation of investment measures, as represented by numerous bilateral investment treaties ("BITs"), and examines its consistency with relevant provisions of the WTO. Unlike trade, there is no comprehensive multilateral framework for investment on a global scale. A previous attempt by the Organization for Economic Co-Operation and Development to create one failed,9 while over 1,100 BITs around the world provide some regulatory governance in this area at the bilateral level. The WTO Agreement on Trade-Related Investment Measures provides a few provisions that prohibit some trade- related investment measures. The General Agreement on Trade in Services also has provisions that have relevance to the regulation of investment measures. Section III of this paper questions the regulatory consistency of BITs with relevant WTO provisions.